Second Appraisal for a Flipped Florida Home: Who Pays
Second Appraisal for a Flipped Florida Home: Who Pays and Can It Delay Closing?
A Florida home may need a second appraisal when several rules fit together. The loan must be a covered higher-priced mortgage loan, or HPML. The seller must also have bought the home within the past 180 days and be selling it at a large price increase.
If the federal rule applies, the lender must pay for the extra appraisal. You cannot be charged for that required second appraisal. It may affect closing if the lender finds the issue late or has trouble getting the report on time.
This rule is not the same as a low appraisal, an appraisal review, or a home inspection. It is also separate from FHA property-flipping rules.
What can trigger the second appraisal rule?
A renovation alone does not trigger the rule. New floors, a new roof, or a kitchen remodel are not enough by themselves.
The lender must review the loan, the seller's prior purchase, the contract price, and possible exemptions.
- The home must be a dwelling bought for the buyer's principal residence.
- The loan must be a covered HPML.
- The seller must have acquired the home within the past 180 days.
- The contract price must exceed the federal price test.
- No exemption can apply.
How the 90-day and 180-day tests work
The lender compares the seller's acquisition date and price with the buyer's contract. Written records must support the seller's prior price.
| Seller owned the home | Price increase that may trigger the rule |
|---|---|
| 90 days or less | More than 10% above the seller's price |
| 91 to 180 days | More than 20% above the seller's price |
The word more matters. An increase of exactly 10% or exactly 20% does not meet that price test.
For example, a seller buys a St. Petersburg bungalow for $300,000. The seller signs a contract to sell it for $365,000 between 91 and 180 days later.
The price increase is more than 20%.
If the loan is a covered HPML and no exemption applies, the lender generally must obtain a second appraisal before closing.
What is a higher-priced mortgage loan?
An HPML is a loan with an annual percentage rate, or APR, above a set amount over the Average Prime Offer Rate, or APOR.
The exact test depends on the loan and lien position. A conventional, FHA, VA, or USDA loan is not automatically an HPML.
Your loan officer can check the APR, APOR, loan terms, and other conditions. Do not decide based only on the loan program's name.
What exemptions can apply?
Some transactions do not need the extra appraisal. Examples may include certain rural properties, government-related sales, inherited property, employee relocations, and other listed situations.
Some qualified mortgages and certain smaller loans may also be exempt. The rules and dollar limits can change.
That is why the lender must review the full file. A recent resale alone does not prove that the second appraisal rule applies.
Who pays for the second appraisal?
When the federal HPML rule requires two appraisals, the lender must pay for the additional one. The lender cannot charge the borrower for that required appraisal.
The seller may agree to pay other contract costs. That does not change the federal rule for the required second appraisal.
Ask which appraisal fee appears on your Loan Estimate and Closing Disclosure. A normal first appraisal and a required second appraisal are not the same charge.
What does the second appraisal include?
The two appraisals must be completed by different appraisers. Each required appraisal must include an interior inspection.
At least one appraisal must review:
- The difference between the seller's price and your contract price.
- Market changes since the seller bought the home.
- Improvements made before your purchase.
An appraisal estimates value. A home inspection looks at condition, systems, and defects. You may need both.
Read our guide to Florida home inspections versus mortgage appraisals.
Can the second appraisal delay closing?
It can, but it does not always do so. Early review gives the lender more time to order the report.
Both required appraisals must be completed before consummation. You must receive copies no later than three business days before consummation. Consummation is when you become legally bound by the mortgage note.
Common timing problems include:
- The prior sale appears after the first appraisal is ordered.
- The lender needs proof of the seller's purchase date or price.
- An appraiser is not available.
- The reports differ and need more underwriting review.
In Pinellas County, the issue may arise when an older home is bought, renovated, and quickly relisted. It may also need closer review when nearby sales are hard to compare.
A recent resale does not prove that closing will move. Closing also depends on underwriting, title, insurance, and the loan program.
For more timing guidance, read how long mortgage underwriting can take in Florida.
Questions to ask before making an offer
- When did the seller acquire the home?
- What price did the seller pay?
- Will the home be your principal residence?
- Could the loan be a covered HPML?
- Does an exemption apply?
- When should the lender order the appraisal?
Ask for written records when possible. A title search may help show ownership history, but the lender may need more documents.
Read our guide on how to review a Florida title commitment before closing.
How FHA rules are different
FHA has separate property-flipping rules. Do not use the federal HPML price tests to predict an FHA result.
In general, an FHA-insured purchase is not eligible when the property is resold 90 days or less after the seller acquired it, unless an exception applies. For some FHA resales from 91 to 180 days, a second appraisal may be required when the resale price is 100% or more above the seller's price.
Your lender must check the exact loan program and current rules.
What if the appraisals do not match?
Different value opinions do not automatically end the purchase. The lender will review both reports, the contract price, and the loan rules.
The result could be more questions, a lower loan amount, a price change, a larger down payment, or no change. The reports and the full loan file control the result.
Read your updated loan documents before closing. Our guide to a Florida mortgage commitment letter explains what to watch for.
Frequently asked questions
Does every renovated Florida home need two appraisals?
No. The sale date, price increase, HPML status, property use, and exemptions all matter.
Can the seller's old appraisal count?
No. The required appraisals must meet the federal rule for the buyer's loan. The seller's old appraisal does not replace them.
Can I pay for the second appraisal?
Not when it is required by the federal HPML rule. The lender must pay for that extra appraisal.
Will the second appraisal always delay closing?
No. It may fit the timeline when found early. It may create a delay when the report or underwriting review is not finished in time.
Official resources
- CFPB: Second appraisal for a flipped home
- CFPB: Higher-priced mortgage loans
- CFPB Regulation Z, Section 1026.35
- CFPB official interpretation on prior-sale information
- HUD FHA Single Family Housing Policy Handbook
- Fannie Mae Selling Guide: Sales comparison and prior sales history
Compliance note: This article is for education only. Programs, terms, rules, and exemptions vary and can change. All loans are subject to underwriting and credit approval. This is not a commitment to lend.
